Category: Articles

Islamic State Is Destroying Ideas, Not Just Artefacts

It is characteristic of totalitarian societies that they feel they need control over the past as well as the present.

So it’s hard not to see an echo of Stalin’s erasure of his former comrades in the deliberate destruction of ancient artefacts and archaeological sites by the Islamic State.

The difference being that when IS bulldoze the 3000-year-old Assyrian city of Nimrud, as they reportedly did last week, they’re not just trying to erase their victims’ history, but humanity’s history as well.

In late February the United Nations released a report describing IS persecution of Christians, Shiah Muslims and religious minorities like the Yazidis as “war crimes, crimes against humanity and possibly genocide”. IS has been murdering gay men and politically active women. It is guilty of genocidal atrocities on a historical and savage scale.

Among this human slaughter the destruction of a few antiquities might seem like a small thing. And of course it is. But it still offers a revealing window into the mindset of radical Islamism.

By now everyone has seen photographs and video of IS militants smashing up statues in the Mosul museum last month. Happily some of those were plaster replicas. Not all were.

In the last few days IS has apparently been tearing down the ruins of the ancient Iraqi city of Hatra.

The most prominent Islamist destruction was that of the Buddhas of Bamiyan – two towering Buddha statues in Afghanistan dynamited by the Taliban in March 2001.

Obviously much of the destruction is deliberately done for Western eyes. The destruction of the Bamiyan Buddhas was one of the rare times Afghanistan made headlines before the September 11 terrorist attacks.

The Taliban sent mixed messages about the purpose of the destruction of the Buddhas. Some officials claimed it was done for standard iconoclastic reasons. An Islamic state could not tolerate the image of an idol from another religion.

But a Taliban envoy to the United States offered a more prosaic, political reason: the Buddhas were destroyed because the West was only offering aid money to restore statues rather than to prevent malnutrition.

The footage of the Mosul museum and Bamiyan Buddhas was broadcast across the world. One Syrian anthropologist told the New York Times in February that “it’s all a provocation”.

And it is true that IS’s iconoclastic principles don’t apparently prevent them from exploiting the lucrative black market for antiquities.

Nevertheless, IS relishes its reputation for brutality and inhumanity. That reputation is part of its recruiting strategy. It offers foreign fighters an absolute break with, and resistance to, the Western world – an ascetic and violent Islamism that is totalitarian in the truest sense of the word. It believes in nothing except itself.

This brutality is its reason for existence. It is what makes the Islamic State, in its mind, the bona fide caliphate, rather than just another militant theocracy in the Middle East.

Last week two writers at the Daily Beast said we shouldn’t attribute this historical destruction to “militant Islam” – lots of totalitarian states try to erase the past.

This is like saying we shouldn’t blame fascism for German atrocities between 1933 and 1945.

And IS’s symbolic ambitions are greater than their 20th century predecessors. Where Hitler and Stalin sought to rewrite history, Islamist totalitarians are trying to destroy it.

Much of the destruction is taking place out of the eyes of the West. Some we only learn about through rumours and unconfirmed reports. For instance, a stunning Ottoman castle in the Iraqi town of Tal Afar has been destroyed – we think. IS has been destroying Christian monasteries, Yezidi shrines and Muslim mosques, both Shiah and Sunni, with little reaction in the West. In Mali Islamist radicals destroyed ancient libraries and tombs.

This destruction isn’t just a calculating provocation for the benefit of Western audiences. It’s ideological.

Worse than those who would downplay the role of Islamist radicalism in this arc of destruction are cultural relativists that excuse it.

Take this academic paper, which condemns not the destruction of the Buddhas but “Western Civilisation’s … fundamentalist ideology of heritage preservation”. The Taliban’s dynamite was just part of the back and forth of history. Why are we so precious? “This paper should not be read as a call for more destruction,” the author says. But, as they say, if you have to write it…

In fact, the Islamist war against artefacts and archaeology is part of a broader “cultural terrorism” being waged around the world, where the target is not an enemy but their idea of themselves.

The Charlie Hebdo killers – and all those who have threatened cartoonists and critics with murder – waged this sort of cultural terrorism as well: attacking not just people, but ideas and symbols that speak to how we understand ourselves. We think of ourselves as an open society, they try to close it by force.

David Hume believed that from the diversity of history we discover the “constant and universal principles of human nature”. By trying to destroy their own heritage, IS and other Islamists are trying to separate themselves from the world.

Meet The Man Who Could Change The Budget

No Australian bureaucrat is as influential – intellectually as well as politically – as the Secretary of the Treasury.

Under the Rudd government Ken Henry was a de facto minister. And think of John Stone, Sir Frederick Wheeler, Sir Roland Wilson. Every word they said was a synonym for authority.

So we probably should have all paid more attention to the new Treasury Secretary’s political debut last week.

Especially considering that, ultimately, the Abbott Government will live or die on the performance of its next budget – something the secretary is responsible for designing.

John Fraser, a former asset manager and public servant, became Treasury Secretary in January this year. On Wednesday he had his first appearance at Senate estimates and on Friday he gave his first major speech, to the Committee for Economic Development of Australia.

What he said was significant. Let’s start with his approach to stimulus – particularly important given rumours and reports of a need to prop up the economy with some government spending in 2015.

You probably remember that at the height of the Global Financial Crisis Ken Henry came up with a simple slogan for Labor’s enormous stimulus package: “Go hard, go early, go households.”

At estimates last Wednesday, John Fraser had an entirely different perspective on radical stimulus: “I approach fiscal stimulus in whatever circumstances with a great deal of care.”

While he declined to directly criticise the previous government’s damn the torpedos! approach, Fraser wondered aloud about the economic models that justified fiscal stimulus decisions.

And he argued that the decision to stimulate had to take into account the productive capacity of the economy. This is a subtle point, but it is one that indicates that the secretary might want to shift focus from the demand side of the economic equation to the supply side.

Ken Henry’s stimulus advocacy was the result of a shift in thinking within Treasury that had begun in a series of secret workshops in 2004.

So the question is whether John Fraser’s comments will represent a shift the other direction: away from Keynesian demand management and towards a focus on production and supply.

If so, then we’re in for some interesting times.

In December I pointed out that Joe Hockey’s rhetoric had taken a very Keynesian turn. The budget is now seen as a “shock absorber” for the economy. Hockey’s been saying that the economy is far too weak for any substantial cuts to the budget – and playing down any return to surplus any time soon.

Fraser seems by disposition and argument unsympathetic to this sort of orthodox crude-Keynesianism. In his Friday speech he said repairing the budget was “an immediate priority”.

He rejected the idea that the economy could grow the budget back to surplus in the short term – the policy settings had to be changed. He told estimates that “I do not like public debt”.

He made it clear that the budget’s problem is just as much on the expenditure side as the revenue side.

In fact, he praised Ronald Reagan’s tax cuts for having “helped to reinforce the entrepreneurial spirit” of the United States. (Although he was less complimentary about Reagan’s overall fiscal position.)

And finally he rejected the International Monetary Fund’s claims that “austerity” had done more damage than good, by pointing out that the IMF had no monopoly on good advice.

You might say these claims would be very amenable to the Government. After all, the 2014 budget was in theory all about cutting expenditure, and Tony Abbott has long said he wants to deliver tax cuts by the end of his first term.

But Abbott and his Treasurer have been backing away from the small government fiscal policy Fraser advocated last week.

At the National Press Club last month the Prime Minister said that “because we have done much of the hard work already, we won’t need to protect the Commonwealth budget at the expense of the household budget.”

Social Services Minister Scott Morrison is apparently seeking more funds for social services like childcare from the budget. It’s all very Howard-era middle class welfare.

And those promised tax cuts are reportedly off the table, according to the Australian Financial Review.

This makes Fraser’s staunch defence of the Government’s previous agenda very important. What would Reagan say to the Great Budget Backdown?

Under Fraser’s supervision, the 2015 federal budget could look very different to what it might have looked like under previous Treasury management.

Because the Treasury view of the world matters.

The department has a reputation for both stubbornness and intellectual dominance of the political agenda. Patrick Weller once wrote of Treasury:

Giving the advice it considers to be correct, regardless of the known policy preferences of minister, indeed, sometimes sticking to those views long after an alternative strategy has been adopted by a government.

Elected politicians have fought for and against the so-called “Treasury line” since the department came into prominence in the 1930s.

Right now, the Abbott Government is understandably gun-shy. But with a deteriorating economy, it’s not clear they can afford to be.

It looked like the Abbott Government was all set for a status quo budget that abandoned the project of fiscal repair. Here’s hoping Fraser can be a strong force against reform lethargy.

Curbing Free Speech Would Deprive Us Of Powerful Tool To Wield Against Islamist Radicalism

Tony Abbott was right about the significance of the massacre at the satirical magazine Charlie Hebdo when it happened in January.

“Freedom of expression is the cornerstone of a free society,” the Prime Minister said. “From time to time people will be upset, offended, insulted, humiliated … but it is all part of a free society”. He praised the cover illustration of the next Charlie Hebdo edition, which depicted Muhammad crying. “I believe in free speech. I absolutely believe in free speech.”

These were powerful, important sentiments. They were a recognition of the threat of Islamist terror to our basic liberties, a threat which we saw manifest in the Danish cartoons crisis of 2006, the murder of the Dutch filmmaker Theo van Gogh, and the fatwa which led to Salman Rushdie’s decade in hiding. Abbott offered them at a moment when they were most needed.

But fast-forward to last Monday, and a central part of the government’s national security strategy is to boost laws against speech that is “vilifying, intimidating or inciting hatred”. The government wants to crack down on hate preachers.

So is free speech inviolate, a liberty that needs to be defended as fundamental to civilisation and democracy? Or must it be restricted for the fight against terrorism?

To understand some of the ructions within the Liberal Party right now, look no further than the government’s back and forth on freedom of speech. The government is struggling with itself on the very idea of liberty.

The Coalition came to power declaring it would pursue a “freedom agenda”. It would be “freedom’s bulwark” against a Labor Party that, under Julia Gillard, had attempted to control and regulate the free press.

And the Coalition promised to repeal, at least in part, section 18C of the Racial Discrimination Act, the law which makes it unlawful to offend or insult someone on the basis of their ethnicity, and the law which Andrew Bolt was found to have breached in 2011.

Section 18C is hardly the only anti-speech law on the books, but it is an iconic one, and was used against the country’s most prominent conservative commentator. For many Liberals, Liberal MPs and those on the right of centre, the 18C promise became a symbol of a reinvigorated, confident liberalism.

Yet over the past six months the Prime Minister has been saying that, in the light of the real threat of terrorism, the balance between liberty and security must tilt further towards security.

This is a false choice.

None of have us the liberty to kill, plot to kill, or incite killing. Preventing and punishing murder is no restraint on freedom. The problem comes when the government proposes to do much more than just enforce the law. Like when it proposes to criminalise non-inciting speech. Like when it proposes to invade everybody’s privacy with mandatory data retention – not just the privacy of those suspected of a crime.

Much of the Abbott government’s earlier national security legislation was necessary and important, particularly the elements that cracked down on foreign fighters. The government now proposes to strip dual citizenship from those who go to fight for Islamic State.

At the same time those necessary legislative changes have been mixed in with some extraordinary overreach. A bill passed in October means journalists who report on “special intelligence operations” could go to jail for 10 years. Another bill passed that month made it a crime to advocate (“counsel, promote, encourage, or urge”) terrorism. But incitement to violence has always been illegal. And there have been laws against advocating terrorism on the books for a decade.

Any law that the government might write to target hate preachers will – almost inevitably – expand to encompass other speech. The government clearly wants to make it illegal to say things like “Osama bin Laden was a hero”. Any legislation that did so would also criminalise the other ideas too. One current darling of the academy, the shock philosopher Slavoj Žižek, praises the terrors of Mao, Lenin and Robespierre.

Such speech is distasteful and disgraceful, yes. It shouldn’t be illegal.

Legislative mission creep happens. For instance, when section 18C was first introduced in 1994, its advocates said it had a strict and narrow purpose. A piece published in The Age in November that year by Colin Rubenstein and Michael Kapel claimed it was only targeted at “the skinhead on the street yelling racist names and other insults at an Asian man, or a woman in traditional Islamic dress, not newspaper articles or anti-immigration pamphlets”. That has not turned out to be the case.

When he announced that they were abandoning section 18C reforms last year, the Prime Minister said it was because the whole thing had become “a complication” when dealing with Australia’s Muslim community. Labor’s fear campaign against the proposed changes had worked.

Yet last Monday Abbott criticised Australia’s Muslim leaders, wondering why they weren’t speaking up against terrorism themselves. He told them to police their own communities with the proposed anti-hate speech laws.

Which raises the question – does the government think the war against terror requires us to comfort or to confront the Muslim community?

Abbott’s instincts after the Charlie Hebdo atrocity were right. Free speech is a liberty we have to protect, and it is a powerful tool to wield against Islamist radicalism. Why does he now think it is a weakness?

Retain Our Privacy, Not Our Data

Australian Federal Police Assistant Commissioner Tim Morris told an audience at the weekend that “those with nothing to hide have nothing to fear”.

This was written up in Fairfax papers as “carefully worded case” for the Government’s mandatory data retention policy.

Now, every piece of evidence we have suggests the terrorist threat right now is severe. It might be growing.

But Morris’s statement is a worry. It lacks all sense of proportionality – essential when crafting security policy.

More importantly, it shows how poorly defended our privacy rights are. Are we really at the stage where we even have to justify the very existence of private spaces – spaces where we are hidden from the all-seeing state?

It is true that the value of privacy is conceptually difficult. We’re constantly trading away privacy for other goals.

Whenever we provide our details to someone at a call centre, share secrets with friends, interact with governments, even simply go outside, we’re in some small way relinquishing control over our own personal information; allowing others to see or know details about ourselves that might otherwise be secured.

It’s particularly difficult today, when we have more opportunities than ever to share information – and the authorities have more capacity than ever to obtain information about us without our consent.

So many people dismiss privacy as a sort of anachronism: either a lost cause or something that only a recluse would care about. Privacy is dead. You’ve heard this before.

But I’ll bet even AFP assistant commissioners secure their internet banking passwords and close their blinds at night.

Privacy fulfils a deep psychological need. Society demands that we mask our true selves and moderate our behaviour when we interact with others. Social norms regulate how we act in public. In many ways these norms are valuable because they ensure a well-ordered public space.

But those norms can also be stifling. We need a space of our own as relief from the judgment of others, if nothing else.

Indeed, the move towards toleration for identity that violated current social attitudes – like homosexuality – was begun by defending the privacy of one’s own home.

Happily we’ve moved past the days where sexuality is just a matter of what people do behind closed doors. But we shouldn’t forget how for such a long time privacy offered protection against an oppressive society.

The need for privacy seems to be an innate part of the human condition. Ethnographers have found that privacy is a universal cultural attribute.

And if you believe in individual freedom – if you believe in any way that we should protect the rights of the individual against the collective – you should be very jealous of any coercive encroachments on the private realm.

As the sociologist Wolfgang Sofsky writes:

Privacy is the citadel of personal freedom. It provides defence against expropriation, importunity, and imposition, against power and coercion.

With all this in mind, the nothing-to-hide, nothing-to-fear argument is truly creepy.

Think of all the assumptions that underpin it.

First: you have to know what you’re doing is wrong. Second: you have to agree that what you are doing is wrong. Third: you have to trust government agents to only violate the privacy of the bad guys. Fourth: you have to trust government agents to not misuse what they find when they observe you. Fifth: you have to believe that only government agents are able to observe you.

These assumptions are questionable, to say the least.

Attorney-General George Brandis has been assuring us we can trust the Government, but that’s not very satisfactory.

Anyway, government agents aren’t the only people who might access data kept under data retention laws.

What about rogue staff of internet service providers? Or hackers attracted to these giant new honey-pots of data? Or private litigants? Data kept under data retention laws will be available in civil litigation as well.

In his national security statement on Monday Tony Abbott flagged further legislation clamping down on “organisations that incite religious or racial hatred” and signalled his intention to strengthen “prohibitions on vilifying, intimidating or inciting hatred”.

But the Government passed legislation that, we were told, was intended to do pretty much the same thing. I argued on The Drum in September that new limits on “advocacy of terrorism” were redundant at best, dangerous at worst.

Who knows what this next tranche of laws outlawing advocacy of terrorism are supposed to add.

But recall the first assumption of the nothing-to-hide argument. You have to know what you are doing is wrong.

With speech prohibitions growing as fast as legislators can draft them, there’s every reason to be afraid for our privacy, and every reason to care when it is taken from us.

You Can’t Blame Foreigners For High House Prices

On Friday Daily Telegraph readers learnt an “elite audit and compliance unit” of the Commonwealth Treasury has been tasked to hunt down foreign investors who have illegally bought houses in Australia.

The elite unit will then force those “dodgy investors” to sell their properties, and prevent them from “pushing up house prices”.

This is … how shall I put it … a bit iffy.

Lots of reasons have been advanced for Australia’s high house prices. Some people blame negative gearing. Others blame things like first-home owners grants, or loose lending standards by the banks, or the Reserve Bank’s monetary settings, or just an irrational market boom.

Some of these are plausible, some less plausible.

The most likely culprit is that government regulation has unbalanced the relationship between supply and demand. State governments have restricted supply at the outer fringes of our cities and placed strict limits on development in the middle. This creates artificial scarcity and pushes up prices.

Anyway, these are all good theories, and worth serious discussion.

But the explanation being advanced by the Government – that foreign investors are causing, at least in part, our globally high house prices – simply doesn’t rate.

If there is foreign demand for investment in Australia, then supply should grow to meet it – unless supply is constrained in some way. Anyway, if you’re worried about foreign demand now, wait until you hear about natural population growth.

So it’s a bit disturbing that the foreigners-make-housing-expensive thesis appears to be a central part of the Abbott Government’s economic agenda for 2015.

In March last year Treasurer Joe Hockey asked the House of Representatives Economics Committee to look at foreign investment in housing. He wanted to know the pros and cons, whether that investment boosts supply of new houses, how Australia compares to overseas, and so forth.

The Treasurer may already have his own views. Back in 2010 he claimed increased foreign investment was “forcing up prices – particularly in Melbourne but all over the country”.

Anyway, the House Committee report was released in November. It’s 148 pages but the nub is this: “No one really knows how much foreign investment there is in residential real estate, nor where that investment comes from.”

That’s it. We don’t have enough information. Anything more than that is insinuation.

Still, insinuation is something that politics excels at.

Currently the Foreign Investment Review Board screens all foreign applications for house purchase. It is illegal for non-resident foreigners to purchase existing homes. Temporary residents have to sell their houses when their visas expire.

The fear is that some foreigners evade Foreign Investment Review Board screening and buy houses illegally, or fail to sell them when they go home.

But there hasn’t been any court action against foreign investors by the Foreign Investment Review Board since 2007. The committee writes that it “defies belief that there has been universal compliance” with the rules for that long.

Perhaps. But really we have no idea. Foreign investment laws are probably broken occasionally. But then again all laws are broken occasionally. The question is whether it happens often enough to draw the attention of the upper echelons of the Australian government.

And there is no evidence – none – to suggest that.

Of course the point here isn’t the sanctity of the law. It’s the politics of foreign investment. This is a political gambit designed to play to the assumed xenophobic instincts of the electorate.

You’ve heard the rumours about people being outbid at auction by “Chinese” buyers? Well, here’s a Commonwealth government policy to match!

I’ve written on The Drum in the past about how regressive and damaging restrictions on foreign investment can be.

Recall Kevin Rudd’s claim in the 2013 leaders’ election debate that he was “a bit anxious, frankly, about simply an open slather approach” to foreign investment, particularly in agriculture.

At that debate Tony Abbott was on the pro-foreign investment side, despite the Coalition’s policy to lower the review threshold for agriculture investment.

The political hostility to foreign investment was sparked by the Gough Whitlam-led Labor opposition in the late 1960s and early 1970s, and blindly aped by John Gorton and Billy McMahon as they tried to demonstrate Liberal Party renewal.

This was an era when closing the borders to foreign money was seen as the “progressive” thing to do.

But in 2015 it seems incredible that, in such a country so hungry for capital, Australia’s political leaders are still trying to lay the blame for our economic problems on foreigners.

Abbott’s Strategy Just A Blast From The Past

Here’s the problem.

Yes, Tony Abbott survived the spill. But that majority vote of support in the Prime Minister was not in spite of his public unpopularity. It was in spite of his underdeveloped plan for the next year of government.

Everybody is wondering how Abbott might be able to turn the ship around.

And Abbott’s plan, offered first at the National Press Club last week and repeated to ABC political reporter Chris Uhlmann the night before the spill, is worryingly insubstantial.

Far too much of the plan for the future harks back to the past. Not just avoiding the wasteful spending of the Labor years, but reversing or modifying Abbott’s personal commitments. No more prime ministerial picks for knights and dames. No more paid parental leave.

Stripped of all the rhetoric, the future of the Abbott Government looks like this:

One: a crackdown on unlawful foreign investment. “Better scrutiny and reporting” of agricultural sales and “better enforcement of the rules” governing house sales. Two: a further crackdown on Islamist radicals in Australia. Hizb-ut-Tahrir, we’re looking at you. Three: a families package, probably something to do with childcare. Four: small business tax cuts.

This is just not enough to pin the Government’s future on.

One of the most revealing and probably most politically powerful stories to come out this weekwas of a quiet discussion between Malcolm Turnbull and Tony Abbott in the Prime Minister’s office during the two-day cabinet meeting.

Turnbull asked Abbott what the plan was. Abbott repeated the major points from his press club address. Foreign investment. Hizb-ut-Tahrir. Turnbull, it was reported, was “underwhelmed”.

The story is drenched in Turnbull camp spin. But it’s very revealing nonetheless.

At the Guardian, Katharine Murphy has a good observation about how Abbott has struggled to define himself in government: “Abbott didn’t know if he was freedom Tony, or security Tony, or austerity Tony, or double the deficit Tony.”

But the confusion goes much deeper than Abbott’s personal philosophy. The Coalition came into power with twin but contradictory stories about how it would operate.

The first story was that the Abbott Government would be the restoration of the Howard era, an era of certainty, and relative economic prosperity. Labor had bickered and bungled around for six years. Abbott would bring back not only John Howard’s governing style, but much of Howard’s governing team. They would be an adult, long-term government. Politics would fall off the front pages.

Ironically enough, this desire to be an “adult government” actually created some of the problems of the first few months, as I pointed out in The Drum at the time.

Yet against this story of stability and certainty was the policy challenge the Coalition believed it had been elected to fix. It is relatively easy to abolish the carbon tax and mining tax, and, as Scott Morrison has demonstrated, not impossible to stop the boats, if stopping boats is your sole concern.

By contrast, fixing the budget in an era of economic sluggishness is an incredible challenge. It requires big, aggressive calls in controversial public policy areas. It requires revolution rather than stability. It makes boldness a more necessary virtue than steady competence.

You could see them struggle to balance these two stories all the way through September 2013 to May 2014.

Eventually crunch time came. Joe Hockey decided to lump all the big calls together in their first budget. They were presented as deficit reduction measures rather than reform proposals in their own right. This was a mistake. Rather than arguing for the budget proposals on their own merits, they stuck with a macro-level Labor-debt-and-deficit line.

Anyway, it all played out very poorly from there.

After many traumatic months nobody imagines that the boldness of the 2014 budget will reappear in 2015. We’re faced with the prospect of Bill Shorten’s small-target Opposition facing off against a gun-shy Government trying to compress itself into an even smaller target.

The prime minister’s office no doubt hopes the small target approach will stop Abbott from haemorrhaging in the polls, but at the same time it will do nothing to put the Government in a competitive position against Labor at the next election.

Governments, even stable, competent, Howard-esque ones, need a purpose; a goal, a vision. Clamping down on foreign investment – even if it was a good idea – isn’t enough.

And in the meantime, the nation’s finances are only going to get worse and worse.

Turnbull failed to put up his hand for the spill on Monday in more than one way. The Communications Minister may have been underwhelmed by Abbott’s plans but has offered no plan of his own. He’s presented no alternative strategy for righting the Government.

And that is almost certainly the conversation Coalition MPs are having right now.

Conservatives Turn Their Critical Eye On Abbott

You almost never get a natural experiment in politics like this. Yet now we’re in the third prime ministerial leadership crisis in five years.

So let’s use this unique and rich dataset (n=3) to draw some preliminary conclusions about Australian political culture.

Crisis 1 occurred in June 2010. Kevin Rudd was rolled by Julia Gillard.

Crisis 2 occurred in June 2013. Julia Gillard was rolled by Kevin Rudd.

We could add some nuances here. Perhaps Gillard’s entire prime ministership was one big leadership crisis. Rudd and his backers had brought the matter to a head twice before the final blow, in February 2012 and March 2013.

Whether Crisis 3 turns into Spill 3 is hypothetical of course. But we mustn’t let details like that hold us back.

In fact, we can’t. It is the nature of these crises that everything is, and will be, interpreted through a leadership lens. Malcolm Turnbull made a speech about Asia? Leadership pitch. Julie Bishop tweets during Abbott’s press club address? Leadership pitch. Scott Morrison put out a media release? Leadership pitch.

Once the cat is out of the bag it is hard to stuff back in. Every press conference is now about leadership. Even if Abbott pulled off a miracle – even if he is prime minister for 10 more years – leadership questions will fester through everything he and his ministers do.

A leak to Kieran Gilbert at Sky now suggests Bishop refused to guarantee she wouldn’t challenge Abbott at a meeting between the two on Sunday. We all know how this plays out. Things are moving very quickly along a well-worn path.

It’s tempting to blame the media for creating the crisis in the first place. This makes sense. They’re the ones asking all those distracting questions about who supports the PM.

But, as we know from last time and the time before that, all those anonymous quotes that litter our newspapers come from somewhere. All those public denials are undermined by private briefings to favoured journalists.

Recall that the Labor Senator Doug Cameron was so publicly angry about anonymous leadership stories in the Daily Telegraph in November 2011 that he threatened a press crackdown, accusing News Limited of being “a threat to democracy in this country”. Of course, it later turned out thatCameron was a big Rudd backer.

Peter van Onselen – who has had his fair share of briefings from discontented Liberal MPs -claimed on Twitter that some of the politicians roped into supporting Abbott at a weekend press conference didn’t actually support him in private.

Yes, Parliament House is really just a nest of professional liars.

And once a party’s stone-faced loyalty has been broken – as it has been, with seemingly every backbencher opening their hearts to every journo that calls them – it’s impossible to get back.

There’s something else that’s blindingly evident when we compare the Labor crises to this one.

Much of the conservative leaning commentariat admired Tony Abbott in opposition. He talked about the right things. He offered (many of) the right policies.

But a year and a half in, their critical floodgates have opened.

Now every significant conservative commentator has offered brutal assessments of how things are going. And they’re not just repeating Abbott’s “blame Labor” explanation. See, for instance, Andrew Bolt, Janet Albrechtsen, Piers Akerman, Grace Collier, Chris Kenny, and Miranda Devine.

This is healthy. When the dust settles – wherever it settles – hopefully conservatives will be able to identify the deeper sources of the Government’s malaise.

We saw nothing like this during the Gillard years.

Rather, the story from Labor’s media supporters was that Gillard was actually a great prime minister (great policies, great parliamentary negotiation skills) but let down by a mendacious News Limited, the Abbott wrecking ball, the evil Kevin Rudd, and the fact that she was female.

Oh, and those ubiquitous “communications problems”.

Now it seems Labor’s self-awareness has plateaued: the bulk of the blame has been laid on Rudd for “stalking” Gillard.

The conservative commentariat didn’t create this latest leadership crisis. But they’re reflecting a deeper dissatisfaction with the Government within the broader conservative movement – a dissatisfaction that began with Abbott’s slow start in 2013, crystallised with the deficit levy in the 2014 budget, became exposed after the Section 18C promise was abandoned, and spiralled out of control over the Christmas break.

The Prince Philip thing was just the catalyst, not the cause.

And if we’ve learned anything from the last few leadership crises, once there’s agreement on the cause, the consequences are hard to avoid.

The battle of ideas

In 1948 a correspondent self-described as ‘a common worker’, wrote to the IPA Review:

For God’s sake do not waste any more good ink and paper writing about Incentives, Profit-sharing, Amenities, Co-operation, Price Control, Inflation and Deflation …

this common worker implored the IPA’s Editorial Committee.

…These subjects are only baits and scares for ignorant workers. Jargon such as this does not offer us one iota of economic security except at the expense of some other of our class.

The letter went on:

Do you wonder why we strike? Why we are tempted by socialism? 98 per cent of us dread Stalinist dictatorship, but under communism that little devil [economic insecurity] would not be always just lurking round the corner.

There was a little dare at the end of the letter.

P.S.—I wonder if you are game to print this in the IPA Review.

The letter appeared alongside an IPA response written most likely by Charles ‘Ref’ Kemp, the IPA’s founding director:

… in the Soviet Union, security of employment has been purchased at a very high price — at the price of freedom. Soviet Russia has abolished unemployment by enslaving the workers. Russia offers far less real security for the average man and woman than the democracies. Under the “Stalinist dictatorship” there are secret police, concentration camps and forced labour groups, and over all the iron hand of the Communist bureaucrats to decide where you work, what your wages are, and what goods you can buy.

From its founding in 1943, more than any other organisation in Australia, the IPA understood the relationship between economic control and political control. During the IPA’s first few decades, staff went on study tours around the world, including behind the iron curtain, to investigate global trends in political economy. The IPA collected information and travel reports concerning the progress and problems of the Soviet economy. One document in the IPA’s archives reported that the ‘whole country is in a strait jacket … it is an insolent hoax to refer to Russia as a democracy’.

They did this because for the IPA’s first few decades, the Soviet Union was not just a geopolitical competitor to the free world, but an intellectual competitor — a competing economic model that many wanted to transplant, at least in part, to Australia.

The Second World War brought with it a raft of regulatory controls, and economic activity was deliberately suppressed to make way for military production. While for the conservative side of politics this was a necessary wartime evil, Labor embraced the new regulatory state, seeing it as a stepping stone towards the ultimate goal of the nationalisation of industry. The entire debate about ‘postwar reconstruction’ was about whether wartime controls ought to be maintained into the peace. As Kemp wrote, Labor was using its position, and the war, ‘to erect a framework of widespread restrictions which it will endeavour to maintain and extend in the post-war period as a means of enforcing its policy of wholesale nationalisation of industry’.

This was not hyperbole. Ministers in the Labor government were pushing hard for the government to ride the public acceptance of controls during war into nationalisation during peace. Nationalisation was one of the core planks of Labor’s policy.

They were amply backed up by the finest minds of the economics profession and bureaucracy. H.C. Coombs, then Director-General of the Department of Post-war Reconstruction, proclaimed that ‘decisions as to how labour, materials, equipment are to be used will be made or influenced increasingly by public authorities rather than individuals’.

Yet conservative opposition to Labor’s regulatory and socialist agenda had collapsed when the Fadden government lost power in October 1941. This was the political gap in which the IPA was formed. Australia needed an organisation to build the intellectual case for the free society and against economic control.

This debate was held in the shadow of the Soviet Union, where economic restriction had been taken to its logical and most tyrannical extreme. Yet in Australia, the Labor mainstream insisted widespread nationalisation and restrictions could be imposed while still maintaining Australian democracy. One could accept some parts of the Soviet model of socialism without accepting the other parts. But as Friedrich Hayek dramatically pointed out in his 1944 book The Road to Serfdom, any state that suppresses market freedom will inevitably be a tyrannical state. If the socialists were worried about the coercive power of monopolists under capitalism, well, the socialist state was ‘the most powerful monopolist conceivable’.

It takes a great deal of coercion to suppress the natural human urge to trade freely. Constructing a planned economy takes even more. Many of Stalin’s crimes were committed in the process of forced agricultural collectivisation and industrialisation.

This was the IPA’s earliest and most powerful message — that economic freedom and individual freedom are inextricably linked. Hayek’s writing deeply influenced the IPA’s first few decades. The IPA Review published an original and significant essay by Hayek, and when he visited Australia in 1976 as a guest of the IPA, the great Austrian reflected that the think tank had, as a result, ‘played a considerable role in the development of my writings’.

Hayek argued that economic liberalism and political freedom go hand in hand—as both Soviet Communism and European Fascism had brutally demonstrated. Radio plays broadcast by the IPA depicted the political struggle as between socialism and democracy. A 1942 statement published by the governing committee to form the IPA argued that:

The public does not realise that extensive and permanent Government control involves loss of personal freedom and the destruction of industrial democracy which must bring with it the end of the traditional democratic political system.

The collapse of the Soviet Union in 1989 was sudden but it was the result of pressures building up within Russia and its empire for many years.

The economic reforms brought about by Mikhail Gorbachev — for instance, the 1987 Law on State Enterprises, which devolved supply and demand decisions down to the level of each (state-owned) firm — went hand in hand with political reform and demands for further openness. The relationship between the opening of an economy and political reform would not have surprised Hayek, and did not surprise the IPA.

On 9 November 1999, the IPA held a ‘Fall of the Wall’ anniversary celebration in Melbourne. Tony Abbott was one of the guest speakers, along with Ray Evans, Peter Coleman and Paddy McGuiness. Coleman spent much of his speech recounting the defences of Communism frequently heard from left-wing intellectuals throughout the Cold War. But as he said:

An anthology of communist follies would do more than document absurdities. It would also remind us of the crucial role played in the long decades of the Cold War by people who have no literary or intellectual pretensions. No strategy, no policy of deterrence, no exposure of communist lies would have had a hope of success without the common sense, loyalty, phlegm and the straightforward idea of right and wrong of the ordinary man and woman.

At its root, the Cold War was a battle for ideas. The most powerful idea — the idea which won the Cold War — was that which animated the IPA in its early days and still animates it today: that economic freedom and individual freedom are indivisible. Harm the former, and you inevitably harm the latter.

Minimum Wages And The Path To Poverty

Do minimum wages cause unemployment?

The Productivity Commission intends to find out. In the words of its chief, Peter Harris, it wants to know “whether or not there is an impact from the minimum wage on employment – we will try and prove up that, or determine if it is a myth.”

This is quite ambitious.

The minimum wage is one of the most contentious issues in economics. This issue has been banged around since at least the 18th century. The broader question of whether imposing price floors reduces supply is centuries older again.

But it is obviously true that any sufficiently large minimum wage above the market price will lock workers out of the workforce.

Imagine we doubled the minimum wage from its current $16.87 an hour to $34. Employers would shrink their workforces and only hire people whose productivity could justify the new cost.

Still some doubts? Imagine tripling the minimum wage. Quadrupling it. Make it $168.70 an hour. Of course people would lose jobs.

Labour markets are markets. They are governed by the impersonal, amoral forces of supply and demand.

Yet our Fair Work Commission thinks “modest minimum wage adjustments” have a “small, or zero, effect on employment”.

Small or zero? How small is small? How modest is modest? It is obviously true that as a minimum wage increase approaches zero its unemployment cost will approach zero as well.

In Fairfax papers on Saturday, the economics writer Peter Martin argued there was little evidence that the minimum wage costs jobs.

Martin cited the most famous paper on the minimum wage in the last few decades – a 1993 study by the economists David Card and Alan Krueger. Card and Krueger looked at a minimum wage increase in New Jersey in 1992 and found a) the minimum wage didn’t cause unemployment, b) it actually increased employment, and c) it increased it by a lot.

Card and Krueger’s paper has become one of the most influential papers in modern economics. But it’s not the only study done on minimum wages. There’s much evidence that points the other way.

For instance, this paper from 2014 found that American minimum wage increases during the late 2000s increased the unemployment-to-population ratio by 0.7 percentage points.

A 2012 study that looked at 33 different countries between 1971 and 2009 found raising minimum wages “reduce employment levels amongst young people and those at the margins of work”.

This 2011 paper finds that minimum wages cause employers to favour young workers from more privileged households than less privileged ones.

This study concludes that the minimum wage hurts job growth over time, a burden that falls most on young workers and low-wage industries.

And in a 2003 paper, Australian economist-turned-politician Andrew Leigh also found small but real unemployment costs of the minimum wage.

We could go on, but ideally Drum columns should not just be lists of journal articles.

It’s true that for all the studies that find the minimum wage causes unemployment in the short or medium term, there are some studies that disagree. This is not a surprise, for a few reasons.

First, much of the research has been done in the United States, which has famously low minimum wages. American minimum wages are probably very close to the wages that would prevail in the open market, so they can’t distort employment all that much.

Second, when looking at minimum wage increases, we’re talking about very small changes to prices in very complex systems. Disentangling what policy change causes what variation in employment – particularly over the course of years, when there can be lags and broader economic changes – is incredibly difficult. Measurement is hard. Determining cause and effect is even harder. Welcome to economics.

And third, the cost of minimum wage increases might not show up in reported employment or wage data, but still could be worn by employees nonetheless.

For instance, employers might reduce conditions to compensate. They might save on training. They might spend less on heating the workplace. They might reduce non-monetary benefits. These costs are hard to measure, but they’re very real. (This paper from the US-based National Centre for Policy Analysis details those non-monetary costs.)

Despite these challenges, surveying the broad evidence in their book Minimum Wages, the economists David Neumark and William L. Wascher conclude that minimum wages are a “relatively ineffective social policy for aiding the poor”:

They entail disemployment effects that are felt most heavily by low-skilled workers. They discourage human capital formation. They lead to price increases on products frequently consumed by low-income families. And, on balance, they seem to do little, if anything, to raise the incomes of poor and near-poor families, and more likely have adverse effects on these families.

Of course, it is possible to accept that minimum wages cause unemployment at some margin but still support them, under the belief that the social security net should catch people who are kicked out of the workforce as a result.

But as I argued in the The Drum last month, our actually-existing safety net is a hotchpotch of paternalism and bureaucratic restriction.

Imagine how bad it will be if the Abbott Government legislates its no-welfare-for-six-months policy. Young workers unable to find work at the minimum wage will also be ineligible for the dole. This is a recipe for destitution.

It’s true that minimum wages are popular. So were housing rent controls and trade protectionism.

One day, hopefully, the Australian public will realise that by preventing the most vulnerable Australians from getting a foothold in the labour market, the minimum wage is creating the very poverty trap it is supposed to alleviate.

When Is Tax ‘Reform’ Actually Just A Tax Grab?

The worst thing about the Abbott Government’s newfound interest in reforming the GST is that it makes Kevin Rudd right.

During the 2013 campaign one of Rudd’s biggest attacks on the Coalition was that Tony Abbott was desperate to increase the GST.

The sole hook for this claim was the fact that the Coalition had promised a tax review that, unlike Rudd’s Henry Review, was supposed to scrutinise the GST alongside everything else.

On that basis any attempt to study Australia’s tax mix could be assumed as a plan to increase any and every tax.

Rudd’s GST attack was deliberate, disingenuous fearmongering – based on virtually nothing, used to fill out a campaign desperate for anything.

Yet now here we are, in 2015, and the Coalition can’t help itself talking about changing the GST.

Rudd would be feeling pretty good about his ability to predict the future. The great sage of Griffith.

There are apparently two proposals on the cards. The first is lowering the threshold at which consumers can import goods without paying GST. The idea is that local retail doesn’t compete on a level playing field against foreign websites.

The second is the perennial one of broadening the base. The GST should be applied to things like fresh food – things that were specifically excluded when the tax was first introduced by the Howard government at the turn of the century.

Both interesting ideas. It’s nice to chat about policy.

Incidentally, these proposals will raise the government quite a bit of money.

It’s painfully obvious that the main reason we’re talking about the changing the GST is because of the Government’s dire budget and political situation.

There’s a big difference between tax reform and tax grabs. The sudden interest in the GST looks everything like a tax grab.

But there’s another reason for the GST gabfest: the Coalition’s search for a “narrative” that will push them through to the next election.

Folk political memory recalls how John Howard won his first re-election on the GST – the same new tax that had sunk John Hewson just a few years before. Even more impressively, Howard pulled off this trick after an unfortunate and unhappy first term.

So you can understand why trying to replicate the master’s 1998 success might have some appeal.

But the GST was a grand program, not a technical adjustment. When Howard and Peter Costello announced the GST they described it as “not a new tax, a new tax system”.

The idea was not that the GST would simply replace the sales tax but would reduce taxes across the board. Howard claimed “the heart” of the system was “the largest personal income tax cut in Australia’s history”. And the GST was supposed to allow states to abolish stamp duties and transaction taxes, and a host of other inefficient taxes.

Despite some superficial similarities, Howard was in a very different political space to Abbott. Howard had much more political capital. Budget repair was on track. There was a sense in the late 1990s that we had prosperity in our future – a sense somewhat lacking today.

And, most of all, Howard’s “non-core” promises did nowhere near as much damage as Abbott’s policy backflips have done.

One of the most credibility damaging moves this Government made was its introduction of the deficit levy on high income earners in the 2014 budget.

Not only did it destroy the promise that “taxes (will) always be lower under the Coalition”, but it raised the marginal tax rate on high income earners to 49 per cent – just under that morally dubious rate where more marginal income goes to the government than to the earner.

The Abbott Government’s approach to taxation thus far has been almost exactly the same Labor’s. They’ve been trying to quietly bump up taxes and tax rates at the edges without causing a stir. In August last year the indexation of the fuel excise resumed. In April the Fringe Benefit Tax rate is going to be bumped up as well.

Then of course there’s bracket creep, which steadily and inexorably raises everybody’s tax rate without the Government having to lift a finger.

You might object that possible changes to the GST should be treated on their own merits. They’re either good ideas or bad ones, regardless of what else is going on in the broader economic or political sphere.

As my IPA colleague Mikayla Novak has pointed out, lowering the import threshold is in the not-a-good-idea category. It won’t fix the problems of the retail sector, and it would be prohibitively expensive to impose.

And as for broadening the base? Well, a broad tax is better than a narrow one. But unless this change is matched by wider reform, imposing the GST on food would be simply soaking the poor.

But the Government isn’t thinking about efficiency, or fairness. It’s thinking about politics. Let’s hope parliament doesn’t use the GST for a short-term budget fix.